From 2027, as announced at UK Budget 2025, ITSA taxpayers with PAYE income will be asked to make ITSA payments through PAYE each payday. A consultation considers how this will work and explores the potential for more timely payment options for other ITSA taxpayers.
On 30 November 2021, HMRC published a ‘Timely payment: summary of responses’ document which summarised feedback about the benefits and challenges of the current Income Tax payment timings, and for moving to more frequent payments in ITSA. As expected, comments were made that it could benefit some taxpayers, though concerns were raised about the increased administrative burden, the complexity of calculating tax liability accurately in-year and possible impacts on cashflow.
Fast forward to UK Budget 2025 (point 4.149) which indicated the demise of the annual reconciliation of tax liabilities by 31 January for taxpayers with PAYE income. From April 2029, the UK Government advises it will require more of the Income Tax liability on Self-Assessment income to be paid in-year via PAYE, i.e. by adjusting the tax code. In brief:
- HMRC will forecast the Income Tax liability based on their last tax return and divided this into equal payments;
- The tax code will be adjusted to collect this via PAYE income, though taxpayers will be able to adjust this; but
- The maximum Income Tax each period will be limited to 50% of pay, though views are sought on whether there needs to be flexibility to this threshold
On 23 June 2026, the Timely Payments in Income Tax Self-Assessment (ITSA) consultation was published considering how implementation could work.
On the theme of more frequent payments, for taxpayers not in PAYE the consultation looks at increasing the frequency of Payments on Account (POA). This could change from July and January to, possibly, monthly or quarterly.
Of course, tax year 2029/30 would be a transition year and liabilities under the new model would be payable at the same time as liabilities under the old model.
For Bookkeepers
The consultation acknowledges any change will add an administration burden for agents. It is open until 04 August 2026 and ICB encourages members to respond in one of three ways:
1. Online;
2. E-Mail to timelypayment@hmrc.gov.uk; or
3. In writing: Helen Derbyshire, Timely Payment Team, HM Revenue and Customs, Trinity Bridge House, 2 Dearmans Place, 4th Floor, Manchester, M3 5BS